An account is an accounting record of increases and decreases in a specific asset, liability, or owners equity item.

Debit

indicates left. indicates right. as Dr. and Cr.

Credit

Abbreviated The

rule applies to all accounts.

In each transaction, debits must equal credits in the accounts. This provides the basis for the double-entry system of recording transactions.

The normal balance of an account is on the side where an increase in the account is recorded.

Because revenues increase owners equity, a revenue account has the same debit/credit rules as the Owners Capital account. Expenses have the opposite effect.

Analyze each transaction for its effects on the accounts. Enter the transaction information in a journal. Transfer the journal information to the appropriate accounts in the ledger.

The book of original entry. It discloses in one place the complete effects of a transaction. It provides a chronological record of transactions. It helps to prevent or locate errors because the debit and credit amounts for each entry can be easily compared.

It is important to use correct and specific account titles in journalizing.

The entire group of accounts maintained by a company. The general ledger contains all the asset, liability, and owners equity accounts.

This format is known as the three-column form of account.

Transferring journal entries to ledger accounts. Posting steps:

In the ledger, in the appropriate columns of the account(s) debited, enter the date, journal page, and debit amount shown in the journal. In the reference column of the journal, write the account number to which the debit amount was posted. Do the previous two steps for credits.

A list of the accounts and account numbers that identify their location in the ledger.

A list of accounts and their balances at a given time. The primary purpose is to prove (check) that the debits equal to the credits after posting. The steps for preparing a trial balance:
List the account titles and their balances in the appropriate debit or credit column. Total the debit and credit columns. Prove the equality of the two columns.

The trial balance may balance even when

A transaction is not journalized. A correct journal entry is not posted. A journal entry is posted twice. Incorrect accounts are used in journalizing or posting. Offsetting errors are made in recording the amount of a transaction.
The trial balance does not prove that the company has recorded all transactions or that the ledger is correct.